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Bank of Japan's Kiuchi: return to 0% interest rate policy possibile

Published 03/18/2014, 11:39 PM
Updated 03/18/2014, 11:43 PM

Investing.com - The Bank of Japan could consider using mainly zero interest rates and phase out large-scale asset purchases if the current aggressive easing policy is successful in reaching 2% sustained inflation by 2015, board member Takahide Kiuchi said Wednesday.

"One option is to gradually shift the focus of monetary policy conduct from the asset purchase policy to the zero interest rate policy, in view of the role of the two policy tools as well as the balance of their positive effects and side effects," he said during a speech to business leaders in western Japan.

"In order to achieve the smooth normalization of monetary policy while maintaining financial market stability, I consider that aiming to make such a shift in the focus of monetary policy conduct, together with the government's fiscal consolidation, will become the important requirement."

Kiuchi also urged faster reforms by the government and companies.

"Generally speaking, monetary policy can provide indirect support for structural reforms mainly by working on the demand side of the economy, but cannot substitute for such reforms themselves," he said.

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